It’s almost been 15 years since Max Gardner and Nye Lavalle met at a conference sponsored by National Consumer Law Center that was held in Colorado, and quickly found themselves viewed as, well… heretics might be the right word. The two became fast friends based on their shared views related to the mortgage servicing industry… and I think both knew that one plus one was about to equal eleven.

Nye was a successful sports marketer and entrepreneur, credited with correctly predicting that Nascar and figure skating would draw huge crowds back in the 1990s, but after being forced to contend with his own mortgage mess, he focused on learning everything about the mortgage industry. As Gretchen Morgenson said in her article about Nye that appeared recently in the New York Times… “In hindsight, the problems he found look like a blueprint of today’s foreclosure crisis.”

It’s hard to imagine two people more tenacious that Nye and Max. Nye became a shareholder in Fannie and stayed on Fannie’s case for two years until finally the GSE hired a DC law firm to investigate his claims. The 147-page report that resulted from that investigation verified that Nye’s suspicions were correct.

Having Nye Lavalle and Max Gardner together is a rare event. Together, they would have to be considered the founding fathers of today’s foreclosure defense movement, so this is an opportunity to learn how it all began and where two of the country’s leading experts see things going from here. Turn up your speakers because it’s time for a very special 2-part Mandelman Matters Podcast… Nye Lavalle & Max Gardner Together in Concert.

The term “Mortgage Note” or “Note” refers to the promise to pay signed by the homeowner or obligor.

The term “Mortgage” refers to the real estate security instrument (mortgage or deed of trust) that must be filed with the local land registry to perfect the rights of the holder of the note and that is subject to the Statute of Frauds.

Note that Standard Fannie and Freddie Uniform Instruments cross-reference the note and the mortgage and provide that a breach of covenants in either document provides right to accelerate balance due and declare a default.

State law determines how mortgages travel—always travel by assignment due to statute of frauds. An assignment is a conveyance of a security interest in real property.

State law governs the necessity to record assignments. Some state laws have been amended to accommodate MERS, but not that many.

Failure to record an assignment is a matter of priority and perfection if a bankruptcy is filed…

The Steven J. Baum law firm, which last month agreed to pay a $2 million fine to settle a federal probe into bogus foreclosure case filings, has now been barred by federal mortgage giants Fannie Mae and Freddie Mac from getting any more referrals of home loan defaults owned by either company.

In addition, the 70-lawyer firm is linked to the first criminal case brought against alleged robo-signers.

The criminal case was brought by the Nevada attorney general against two title officers — Gary Trafford and Gerri Sheppard — charged with forging signatures on 606 foreclosure-related mortgage documents.

American Banker did an outstanding, superb job with this article. Please read.

American Banker-

Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners.

The practice continues nearly a year after the companies were caught cutting corners in the robo-signing scandal and about six months after the industry began negotiating a settlement with state attorneys general investigating loan-servicing abuses.

Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.

On Wednesday, consumer defense attorney Linda Tirelli added another outrageous example of mortgage servicer misbehavior to her growing file of hundreds of such abuses against New York homeowners.

The overcharging by a servicer — which manages mortgages day-to-day for lenders — to bill a homeowner in foreclosure over $2,700 for property inspections that cost just $9.60 a pop came as federal and state regulators are investigating shoddy practices by servicers and big banks, which are often one and the same.

O. Max Gardner III, a lawyer and expert on foreclosure cases handled in bankruptcy courts, said that the OCC must have used an unfairly narrow definition of a wrongful sale.

He said that in most of the hundreds of cases he has handled, banks misstated the amounts homeowners actually owed, failed to record or properly allocate mortgage payments, and tacked on thousands of dollars in unauthorized and excessive fees.

“We see a problem with the dollars and cents in almost every single bankruptcy case that I file,” Gardner said.

Gretchen Morgenson’s column in the New York Times yesterday points out a connection we should all be making: the high-speed, no time to think or do things right mindset of the mortgage industry is to blame for a lot of the problems we’re facing today, and that same mindset seems to be controlling the actions of the Attorneys General right now. Tom Miller, the Iowa Attorney General leading the talks, told us just last week, “We’re going to move as fast as we can.”

I just had a chance to look through the 27 page document. My first impression is profound sadness in knowing that the Attorney Generals feel compelled to state that all affidavits must be truthful and contain no false statements. Have things gotten so bad that we must now get the Servicers to write 1,000 times on the school blackboard: “We must tell the truth; We must tell the truth; We must tell the truth.” And we must make sure our attorneys and third-party vendors are telling the truth. Have they all been lying on such a grand scale? I am sorry for the rhetorical question—of course they have.

Q. So this doesn’t necessarily mean
3 that someone physically picked up the file
4 from LPS; correct?
5 A. My understanding is that this is
6 a note that automates when the attorney
7 has confirmed receipt through new image.
8 Whether that’s manual or not, I couldn’t
9 say based on the notes. And then new
10 image stamps into the LPS Desktop
11 confirming that NIE ID number 0966 and on
12 was pulled in, those documents were
13 received by the attorney.
14 Q. Does LPS have any employees at
15 the Steven J. Baum law firm?
16 A. Not that I’m aware of.

<SNIP>

Q. This is from the Steven J. Baum
law firm; correct?
3 A. It appears to be.
4 Q. Would you have any reason to
5 doubt that?
6 A. No.
7 Q. And could you tell me what this
8 entry represents.
9 A. To the best of my understanding,
10 they have user has completed a POA
11 requisite data form, exactly what it says.
12 I guess I couldn’t give you a full answer.
13 I don’t manage this process, but it
14 appears they are requesting something.
15 Q. So just start me off, POA
16 underscore requisite, what does that stand
17 for?
18 A. I could guess.
19 Q. Is that a category or a type of
20 document?
21 A. Again, I could guess.
22 Q. I don’t want you to guess, but
23 can you make an educated guess?
24 A. Power of attorney.
25 Q. Who at LPS would have a better
understanding of this process? You said
3 it’s not really you.
4 A. I don’t know.
5 Q. Let’s go to entry two hundred
6 fifty-one dated 11/4/08. User has updated
7 the system for the following. Power of
8 attorney requested, completed on 11/4/08.
9 Do you see that?
10 A. Yes.
11 Q. Can you tell me what that entry
12 is.
13 A. I could give you an educated
14 guess.
15 Q. Go ahead.
16 A. My educated guess would be the
17 attorney has requested a power of
18 attorney.
19 Q. From whom?
20 A. From that note, I couldn’t say
21 for certain. But below the secondary
22 note, it seems to indicate JP Morgan to
23 Scott Walter.
24 Q. Who is asking for that? It’s
25 kind of written in the passive.
Who’s actually asking for the
3 power of attorney?
4 A. Appears to me from the notes
5 that Steven J. Baum’s office is making
6 this request.

<SNIP>

A. It appears to be Steven J. Baum
3 noting the file, memorializing that they
4 have prepared an assignment, they have
5 uploaded it into the LPS Desktop to be
6 reviewed and executed, and that it isn’t
7 back yet.8 Q. What does it mean assignment was
9 received not signed, who’s receiving that?
10 A. I wouldn’t know.
11 Q. Well, do you read this as the
12 assignment is not signed?
13 A. I read it as an assignment is
14 not signed or, let me better state what I
15 meant to say, is that a signed assignment
16 hasn’t been received by Steven J. Baum.17 Which assignment though I couldn’t tell
18 from this note.
19 Q. Would this assignment be signed
20 by LPS; is that what this is saying?
21 A. It appears that the attorney is
22 stating that.However, I can’t tell you
23 whether LPS would have signed this
24 document or not without seeing the
25 document that the note’s referencing.

Testimony by a Bank of America Corp. employee in a New Jersey personal bankruptcy case may give more ammunition to homeowners and investors in their legal battles over defaulted mortgages.

Linda DeMartini, a team leader in the company’s mortgage- litigation management division, said during a U.S. Bankruptcy Court hearing in Camden last year that it was routine for the lender to keep mortgage promissory notes even after loans were bundled by the thousands into bonds and sold to investors, according to a transcript. Contracts for such securitizations usually require the documents to be transferred to the trustee for mortgage bondholders.

In the case, U.S. Bankruptcy Judge Judith H. Wizmur on Nov. 16 rejected a claim on the home of John T. Kemp, ruling his mortgage company, now owned by Bank of America, had failed to deliver the note to the trustee. That could leave the trustee with no standing to take the property, and raises the question of whether other foreclosures could similarly be blocked.

Following the decision, the bank disavowed the statements by DeMartini, whom it had flown in from California to testify. It was the policy of Countrywide Financial Corp., acquired by Bank of America in July 2008, to deliver notes as called for in its securitization contracts, according to Larry Platt, an attorney at K&L Gates LLP in Washington designated by the bank to answer questions about the case.

“This particular employee was mistaken in what she said,” Platt said in a telephone interview.

Attorney Analysis

Wizmur’s ruling is being scrutinized by lawyers for borrowers seeking to stall repossessions as a way to press lenders to modify their debt. Attorneys for homeowners have already won cases by calling into doubt the legitimacy of affidavits used to take back properties.

“If this is correct, many, many, many foreclosures already occurred in which this plaintiff didn’t have the note,” said Bruce Levitt, the South Orange, New Jersey, attorney representing Kemp. “This could affect thousands or hundreds of thousands of loans.”

State your full name and current position.
Provide us with your definition of a document custodian.
What is your exact job title?
What are your responsibilities?
Where are you employed?
Where does your company store original documents?
How are they stored?
If you outsource this storage, who is the outsource provider?
How do you confirm delivery to the outsource provider?
How do you retrieve original documents?
How long do you save original documents?
Do you have a written original document destruction policy?
Please explain it and produce a copy of the policy.
Do you retain images of original of all documents?
How are they retained?
Where are they retained?
How long are they retained?
What type of computer system is used for the image retention?
Do you have a Records Compliance or Management Department?
Explain how it works, who is employed there, and where it is located.
Describe all information that you store electronically.
Do you have an ESI manager?
Who, where does he or she work, what does he or she do?
What is your policy on the retention of electronically stored documents?
Do you have a written policy for ESI documents?
Do you have any automated archiving systems?
If yes, then explain how they work and how documents are achieved.
Where are the archived documents stored?
How do you save data to a file that has already been achieved?
State the name of the director or manager of your document archiving operation.
How do you store data acquired through mergers or acquisitions?
How do you retrieve historical data from the archives?
Explain the process in detail.
Do you have an organizational-wide data map or inventory of all electronically stored data?
Can you produce a copy of that map?
Do you have any litigation ready data files?
Where are they stored?
How are they created?
Who is in charge of creating these files?
Why are they created?
Is there such a file in this case?
Where is the data stored?
Do you have any electronic data stored on tapes?
Describe the data and the type of tapes?
Where are these tapes stored?
Do you maintain a disaster recovery location?
Where is it?
Do you store electronic data at this location?
How is it stored?
How long is it stored?
What types of servers are used to store the data at this location?
How long is the data stored?
Do you have a data destruction policy at the disaster location?
Please explain and produce all written protocols.
Explain how you retrieve data from the disaster location?
Explain the time and expenses involved in securing date from the disaster recovery location?
State if any data related to this case has been destroyed?
Describe the data in detail and when and under what circumstances it was destroyed.
Have you seen any notice in this case to preserve all of the ESI?
When, where and how did you see it?
Has any data related to this case been destroyed since you saw it?
Who is your Media Destruction Manager?
Where is this person located?
What are the responsibilities of this person?
Explain all of the steps your company has taken in this case to preserve ESI evidence?
Have you created a data file of ESI for this case?
When was it created?
Name all parties involved in the creation?
Where is that data filed now?
Explain all of the steps that were taken to create the ESI file for this case.
Are there any ESI that you could not find or include in the file?
If so, please explain.
If any of the data still exists, have you or anyone in your company investigated the restoration of any deleted or damaged data?
When, who did this and what did they do?
If not, then why not?
With respect to the ESI file that has been created for this case, have the documents been scrubbed for metadata?
If yes, then when, who ordered, and why?
Who was involved in the scrubbing?
Was a scrubbed metadata file created?
Who created the file and who has custody of the file?
Do you backup your data every day?
How and where is the backup data?
Who is in charge of your backup operations?
What data is backed up?
Do you back up programs and systems or just the data?
What is the difference between your backup data system and your archived data storage system?
How long is backup data retained?
What is the format for the media in the ESI file created for this case?
Did you ever stop backing up or archiving data in this case in anticipation of litigation?
If so, when, why, and who ordered such actions?
When was a litigation hold placed on the destruction of any of the ESI data related to this case?
Who issued the hold and how was it implemented?
Do you have any type of dormant document liability policy?
If so, then please explain in detail how it works?
Has any of the ESI data in this case been destroyed or deleted pursuant to a dormant document liability policy?
If so, can you identify who took such action, when it was taken, who ordered it taken, and why it was taken?
Name all parties who have access to any of the data related to this case.
Explain all security features employed by your company to prohibit the unauthorized access to any of your ESI data?
Do you keep any type of catalogue of information on tapes or other media related to historical ESI?
If so, please explain how this system works?
Where are the catalogues filed and how are they maintained?
State the names of all of the servers and the location of all such servers that contained any ESI data related to this case.
State your current policy on saving company email.
State your current archiving and backup programs with respect to email.
State all of your email format types, date ranges for retention of email, and the names of all custodians.
Please identify all types of files used by your company, the capacity of such files, the creation dates and how those dates are preserved, the modification dates and how they are recorded, and the maximum size of each file.
Does your company employ a de-duplication policy as to ESI data?
If so, please explain how it works?
Has any data in this case been subject to destruction pursuant to any such policy?
If so, identify all such ESI data.
Do any lawyers representing you in this case have access to any of your data files?
IF so, please explain the extent of such access, how it is tracked, and purpose of the same?
Have you migrated any ESI data in this case from older, disparate media sources into modern managed tools?
If so, explain in detail the older data systems, how the migration occurred, and explain the new storage media used?
Name all of the parties on the data migration team or group.
Do you have a Legal Records Management Team?
Name all of the Team members and the location?
Was the Team involved in this case?
If yes, then explain in detail the extent of their involvement.
Do you use a third-party IT vendor for ESI data capture, storage and archiving?
If so, who and how long have they been used?
Who is the on-site representative for your ESI vendor?
Does your backup vendor use DLT4, LT01 or 4MM tapes?
What type of backup software does the vendor use?
Do they use Backup Exec, NetBackup, Legato Net Worker, Trivoli Storage Manager, ArcServe, CommVault Galaxy or HP Omniback?
Describe all messaging systems used by your company.
Do you use Lotus Notes?
Do you use Novell GroupWise or any others?
How is the messaging data saved, backed up and archived?
Do you convert the messages media to any other type of media for storage?
If so, describe the media and how this is accomplished and by whom?
Explain all due diligence programs and procedures used to verify the integrity of your data?
Explain all due diligence programs and procedures used to secure and safeguard your data.
Do you maintain custody logs on the transfer of any ESI data?
What type of logs?
Who maintains and where are they located?
Do you have a “Best Practices” guide for of the operations described herein?
Can you produce it?

Documents submitted to a court are supposed to be true as submitted. As an attorney, If I file a document with a court in which I swore I personally verified that the information contained within the document is true, and I didn’t actually do that, I’d get in real trouble. It’s simple: That’s fraud in the eyes of the court.

GMAC, JPMorgan Chase and Bank of America recently admitted that their employees routinely sign thousands of documents without verifying what they’re signing. Those documents are then submitted to courts as if the documents were true, to enable the banks to foreclose on delinquent properties. Wells Fargo and CitiMortgage told the New York Times their employees do not engage in similar practices. Yet new evidence shows they do.

Confusion at Wells Fargo
Herman John Kennerty of Wells Fargo has given a deposition describing the department he oversees for Wells Fargo. It’s a department dedicated to simply signing documents. Kennerty testified that he signs 50 to 150 documents a day, verifying only the date on each. What else might he want to verify? Well, in one document he signed, he supposedly transferred the mortgage from Washington Mutual Bank FA to Wells Fargo on July 12, 2010. But that’s impossible, since Washington Mutual Bank FA changed its name in 2004, and by any name WaMu ceased to exist in 2008, when the FDIC took it over. Making the document even less comprehensible, the debtor had declared bankruptcy a month earlier, according to Linda Tirelli, who represented the debtor. Why would Wells Fargo want a mortgage from someone in bankruptcy? Finally, Tirelli pointed out that the papers Wells Fargo filed included a different transfer of the mortgage dated three days before the debtor took out the loan. The documents are a mess, yet Kennerty signed them regardless.Legal Nonsense at CitiMortgage
Similarly, one M. Matthews signed a number of documents that CitiMortgage has used to try to foreclose on properties. While Matthews may or may not sign hundreds of documents a day — I have not yet found a deposition in which he swears that he does — he certainly does not verify the contents of the documents he’s signing. For example, he signed a document supposedly transferring a mortgage from Lehman Brothers to Citi in 2009. It’s hard to see how that’s possible, since Lehman had already ceased to exist. When confronted with its nonsensical filing, Citigroup decided not to foreclose. Instead, it gave the homeowner a meaningful mortgage modification–$15,000 principal reduction, plus a 30 year fixed mortgage at 3%. Tirelli, who represented the debtor in that case too, notes that she sees bad documents in the vast majority of cases, and she keeps files of “robosigned” documents.

It’s true that in both the WaMu and Lehman Brothers documents, the signers were officially representing an entity called MERS and acting as the “nominee” of WaMu and the “nominee” of Lehman Brothers. But that doesn’t change the fraudulent nature of the documents as filed. MERS can’t continue to be the nominee of an entity that doesn’t exist. Moreover, MERS can’t assign something it doesn’t have, and MERS itself will admit it doesn’t own the underlying note or mortgage.

Possible Sanctions for JPMorgan Chase
Wells Fargo and CitiMortgage aren’t the only big banks to misrepresent their practices in the media; JPMorgan Chase told the New York Times that it had not withdrawn any documents in a pending case. However, Chase has in fact withdrawn robosigned documents in a case Tirelli is currently defending. Chase now faces possible sanctions in the case.

Why are the big, sophisticated banks submitting such problematic documents to the courts? The key reason is that sometimes when a bank wants to foreclose, it has to prove it actually has the right to foreclose — that it owns the note and accompanying mortgage. Unfortunately for the banks, the securitization of mortgages and the changes in property ownership documentation that accompanied it make it hard for the banks to establish clean chains of title and produce original documents. Hard, that is, in an environment where a massive number of foreclosures must be started and completed in a timely manner.

JOHN KENNERTY, a/k/a HERMAN JOHN KENNERTY

JOHN KENNERTY a/k/a Herman John Kennerty has been employed for many years in the Ft. Mill, SC offices of America’s Servicing Company, a division of Wells Fargo Bank, N.A. He signed many different job titles on mortgage-related documents, often using different titles on the same day. He often signs as an officer of MERS (“Mortgage Electronic Registration Systems, Inc.”) On many Mortgage Assignments signed by Kennerty, Wells Fargo, or the trust serviced by ASC, is shown as acquiring the mortgage weeks or even months AFTER the foreclosure action is filed.

Titles attributed to John Kennerty include the following:

Asst. Secretary, MERS, as Nominee for 1st Continental Mortgage Corp.;

Asst. Secretary, MERS, as Nominee for American Brokers Conduit;

Asst. Secretary, MERS, as Nominee for American Enterprise Bank of Florida;

MEMORANDUM OF OPINION

ARTHUR I. HARRIS, Bankruptcy Judge

This matter is currently before the Court on the cross-motions for summary judgment of the plaintiff-trustee, Mary Ann Rabin, and defendant RBC Mortgage Company. At issue is whether the trustee is entitled to avoid a mortgage because the notary’s certificate of acknowledgment failed to recite the name of the party whose signature was acknowledged, notwithstanding a postpetition attempt to correct this omission. For the reasons that follow, the Court holds that the mortgage was not executed in accordance with Ohio’s statutory requirements and can be avoided by the trustee as it relates to the undivided half interest of the debtor Mary Brigid. Accordingly, the trustee’s motion for summary judgment is granted, and RBC Mortgage’s motion for summary judgment is denied.

FACTS AND PROCEDURAL BACKGROUND

Unless otherwise indicated, the following facts are not in dispute. The debtor Mary Brigid and non-debtor Susan Radbourne are joint owners of the real property located at 3000 Yorkshire Road, Cleveland Heights Ohio, 44118. The deed was recorded on September 10, 1999, and provides “Mary Brigid, unmarried and Susan M. Radbourne, unmarried remainder to the survivor of them.” On July 9, 2003, RBC Mortgage extended a loan to Radbourne. The loan was secured by a mortgage of the real property, which was recorded in the Cuyahoga County Recorder’s office, Instrument No. 20030110552 on July 11, 2003.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and
covenants contained in this Security Instrument and in any riders
executed by Borrower and recorded with it.
WITNESSES:
X/s/ Brent A. White /s/ Susan M. Radbourne
Brent A. White Susan M. Radbourne — Borrower
/s/ Mary Brigid
— Borrower
STATE OF OHIO
COUNTY OF Cuyahoga
On this 9 day of July 2003 , before me, a Notary Public in and for
said County and State, personally appeared
Susan M. Radbourne Unmarried
___________________________________________________________________
the individual(s) who executed the foregoing instrument and
acknowledged that he/she/they did examine and read the same and
did sign the foregoing instrument, and that the same is
his/her/their free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Brent A. White
Notary Public
(Seal)
* * *

On November 7, 2008, the debtor filed a petition under Chapter 7 of the Bankruptcy Code (case # 08-18750). On February 5, 2009, the trustee of the Chapter 7 estate initiated this adversary proceeding seeking to avoid the mortgage of RBC Mortgage as it relates to the debtor’s half interest pursuant to section 544 of the Bankruptcy Code and to determine the interests of all parties in the property.

The complaint named as defendants Mary Brigid, Susan Radbourne, Mortgage Electronic Registration System, RBC Mortgage Company, Chase Home Finance, Huntington National Bank, the Cuyahoga County Treasurer, and the City of Cleveland Heights. The treasurer, City of Cleveland Heights, Mary Brigid, Susan Radbourne, and RBC Mortgage filed answers to the complaint. In its answer, the City of Cleveland Heights asserted a judgment lien in the amount of $1,316.80 at the rate of 5% interest from February 26, 2009, No. JL06258471. Radbourne asserted an undivided half interest in the property in question. She also brought a cross-claim for negligence against RBC Mortgage and requested a reservation of her right to purchase the real estate pursuant to Section 363(i). In its answer, RBC Mortgage asserted that the debtor held only bare legal title and that the trustee had constructive notice.

On June 4, 2009, all parties stipulated that the Cuyahoga County Treasurer has the first and best lien on the subject property for taxes and assessments. On December 27, 2009, the debtor’s deposition was taken, at which the debtor acknowledged signing the mortgage outlined above. On January 13, 2010, attorney David A. Freeburg filed an affidavit of facts regarding the acknowledgment of the mortgage by Mary Brigid. On January 14, 2010, the trustee filed a motion for summary judgment seeking to avoid the mortgage held by RBC Mortgage. On January 21, 2010, RBC Mortgage filed a cross-motion for summary judgment and a response. Briefing on the cross-motions for summary judgment is complete, and the Court is ready to rule.

JURISDICTION

Determinations of the validity, extent, or priority of liens are core proceedings under 28 U.S.C. section 157(b)(2)(K). The Court has jurisdiction over core proceedings under 28 U.S.C. sections 1334 and 157(a) and Local General Order No. 84, entered on July 16, 1984, by the United States District Court for the Northern District of Ohio.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56(c), as made applicable to bankruptcy proceedings by Bankruptcy Rule 7056, provides that a court shall render summary judgment, if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

DISCUSSION

Under the “strong arm” clause of the Bankruptcy Code, the bankruptcy trustee has the power to avoid transfers that would be avoidable by certain hypothetical parties. See 11 U.S.C. § 544(a). Section 544 provides in pertinent part:

(a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by —

Page 7

. . . .

(3) a bona fide purchaser of real property, other than fixtures, from the debtor, against whom applicable law permits such transfer to be perfected, that obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the case, whether or not such a purchaser exists.

11 U.S.C. §544. Any transfer under section 544 is preserved for the benefit of the estate. See 11 U.S.C. § 551.

The mortgage provides that federal law and the law of the jurisdiction in which the property is located will control. Because the real property in question is located in Ohio, the Court will apply Ohio law to determine whether the trustee can avoid the mortgages using the “strong arm” clause. See Simon v. Chase Manhattan Bank (In re Zaptocky), 250 F.3d 1020, 1024 (6th Cir. 2001) (applicable state law governs determination whether hypothetical bona fide purchaser can avoid mortgage).

Code expressly provides that a bankruptcy trustee is a bona fide purchaser regardless of actual knowledge. See In re Zaptocky, 25,0 F.3d at 1027 (“actual knowledge does not undermine [trustee's] right to avoid a prior defectively executed mortgage.”). Because actual knowledge does not affect the trustee’s strong-arm power, the Court need only determine whether the trustee had constructive knowledge of the prior interests held by the defendant RBC Mortgage.

Ohio law provides that “an improperly executed mortgage does not put a subsequent bona fide purchaser on constructive notice.” Zaptocky, 250 F.3d at 1028. Ohio courts have refused to allow a recorded mortgage to give constructive notice when the mortgage has been executed in violation of a statute. See In re Nowak, 10,4 Ohio St. 3d 466 (2004) (listing cases). The first question, then, is whether the mortgage was executed in compliance with, or substantially conforms to applicable statutory law. A second question, if the mortgage was not executed in compliance, is whether the December 27, 2009, acknowledgment by Mary Brigid and the January 13, 2010, affidavit filed by attorney Freeburg corrected the defect. A third question, if the lien remains defective, is what interest the trustee is entitled to avoid.

The Mortgage Was Not Properly Executed in Accordance with Ohio Revised Code § 5301.01

Ohio Revised Code § 5301.01 requires four separate acts to properly execute a mortgage: (1) the mortgage shall be signed by the mortgagor; (2) the mortgagor shall acknowledge his signing in front of a notary public, or other qualified official; (3) the official shall certify the acknowledgment; and (4) the official shall subscribe his name to the certificate of acknowledgment. OHIO REV. CODE ANN. § 5301.01(A) (2004); see Drown v. GreenPoint Mortgage Funding, Inc. (In re Leahy), 376 B.R. 826, 832 (Bankr. S.D. Ohio 2007) (listing four requirements provided by Ohio Rev. Code. § 5301.01).2 At issue in this case is whether the certificate of acknowledgment, which omitted the name of Mary Brigid, satisfies the third requirement to proper execution of a mortgage.

(A) The person acknowledging appeared before him and acknowledged he executed the instrument;

(B) The person acknowledging was known to the person taking the acknowledgment, or that the person taking the acknowledgment had satisfactory evidence that the person acknowledging was the person described in and who executed the instrument.

The Ohio Revised Code further provides that a certificate of acknowledgment is acceptable in Ohio if it is in a form prescribed by the laws or regulations of Ohio or contains the words “acknowledged before me,” or their substantial equivalent. OHIO REV. CODE § 147.54. Ohio’s statutory short form acknowledgment for an individual is as follows:

State of ________
County of ________
The foregoing instrument was acknowledged before me this (date) by
(name of person acknowledged.)
(Signature of person taking acknowledgment)
(Title or rank) (Serial number, if any)

OHIO REV. CODE § 147.55(A).

The trustee argues that the mortgage was improperly recorded because the certification of acknowledgment does not conform to section 5301.01 of the Ohio Revised Code with respect to the debtor. Specifically, the trustee asserts that the clause fails to identify the name of the debtor. The Court agrees. Recent case law, including a 2008 decision from the Sixth Circuit BAP, supports the trustee’s position that an acknowledgment is defective if it fails to identify the person whose signature is being acknowledged. See In re Nolan, 38,3 B.R. 391 (6th Cir. B.A.P. 2008); In re Sauer, 41,7 B.R. 523 (Bankr. S.D. Ohio 2009); Daneman v. Nat’l City Mortg. Co. (In re Cornelius), 408 B.R. 704, 708 (Bankr. S.D. Ohio 2009) (“The absence of the name of the mortgagee acknowledging election is the functional equivalent of no certificate of acknowledgment and renders an acknowledgment insufficient.”); Drown v. Countrywide Home Loans, Inc. (In re Peed), 403 B.R. 525, 531 (Bankr. S.D. Ohio 2009) affirmed at No. 2:09cv347 (S.D. Ohio Feb. 18, 2010); Terlecky v. Countrywide Home Loans, Inc. (In re Baruch), No. 07-57212, Adv. No. 08-2069, 2009 Bankr. Lexis 608 at *22 (Bankr. S.D. Ohio Feb. 23, 2009) (“An acknowledgment clause containing nothing relative to the mortgagor’s identity is insufficient; rather, an acknowledgment clause must either identify the mortgagor by name or contain information that permits the mortgagor to be identified by reference to the mortgage.”); In re Leahy, 37,6 B.R. at 832. See also Smith’s Lessee v. Hunt, 13 Ohio 260, 269 (1844) (holding that court was unable to infer name of grantor when acknowledgment was blank as to the grantor and, thus, the mortgage was defective and did not convey title).

Because RBC Mortgage conceded that at the time of execution the mortgage was defective, and because no argument was made regarding substantial compliance, this Court holds that the mortgage failed to substantially comply with the filing requirements. Therefore, the mortgage was improperly executed with respect to the debtor because the certification of acknowledgment failed to indicate who appeared before the notary public as required under Ohio Revised Code section 5301.01.

The Court rejects the argument of RBC Mortgage that Ohio Revised Code section 5301.45 and Bankruptcy Code section 546(a)(1) allow it to correct a defective acknowledgment and defeat the trustee’s strong arm powers by using the debtor’s testimony taken at a deposition postpetition. First, section 5301.45 simply does not apply to any situation other than the correction of pagination of acknowledgment clauses. Second, even if section 5301.45 did apply, the postpetition acknowledgment by the debtor was not voluntary. These issues are discussed more fully below.

1. Section 5301.45 is meant as a mechanism to correct pagination only

While older versions of the statutes at issue in this case date back as early as the 1800′s, the Court begins its analysis with the 1910 version of the Ohio General Code. See THE GENERAL CODE OF THE STATE OF OHIO (The Commissioners of Public Printing of Ohio 1910) (“Being an Act entitled `An Act to revise and consolidate the general statutes of Ohio”). Section 8510 of the 1910 Ohio General Code provided:

A deed, mortgage, or lease of any estate or interest in real property, must be signed by the grantor, mortgagor, or lessor, and such signing be acknowledged by the grantor, mortgagor, or lessor in the presence of two witnesses, who shall attest the signing and subscribe their names to the attestation. Such signing also must be acknowledged by the grantor,

mortgagor, or lessor before a judge of a court of record in this state, or a clerk thereof, a county auditor, county surveyor, notary public, mayor, or justice of the peace, who shall certify the acknowledgment on the same sheet on which the instrument is written or printed, and subscribe his name thereto. (Emphasis added). This 1910 statute outlined the requirements to validate a deed, mortgage, or lease, including the necessity for two witnesses and that the acknowledgment page be on the same page as the instrument, and is the precursor to Ohio Revised Code section 5301.01.

The original version of what is now Ohio Revised Code section 5301.45 is provided in Local Laws and Joint Resolutions, 57 v 10, and was titled as section 8559 of the Ohio General Code. The current version of the statute is substantially identical to its 1910 version and provides in full:

When a deed, mortgage, lease, or other instrument of writing intended to convey or encumber an interest in real estate is not printed or written on a single sheet, or when the certificate of acknowledgment thereof is not printed or written on the same sheet with the instrument, and such defective conveyance is corrected by the judgment of a court, or by the voluntary act of the parties thereto, such judgment or act shall relate back so as to be operative from the time of filing the original conveyance in the county recorder’s office.

OHIO REV. CODE § 5301.45.

Thus, the state of the law regarding the formal requirements of a valid mortgage in 1910 was that although section 8510 required the instrument and acknowledgment clause to be on the same page, section 8559 allowed for correction of this deficiency through voluntary act of the parties or judgment by the court. However, the Ohio Supreme Court held in 1939 that certificates bound to an instrument substantially complied with the statute. The Court explained that:

When the provision now found in Section 8510, General Code, was enacted, more than a hundred years ago, deeds, mortgages and leases were usually and could easily be written in their entirety on a single sheet of paper. In recent years many of such instruments are so long that to write or print them on one sheet would require a roll of paper. Often, too, the acknowledgments are so numerous as to present the same difficulty. What the Legislature sought by the enactment of the provisions now found in Section 8510 was no doubt the prevention of fraud that might be readily perpetrated if the certificate of acknowledgment were on a sheet separate from the instrument itself. With respect to the lease in litigation this danger is eliminated because the certificates are bound to the other parts by rivets so as to make a unified whole.

Noticeably missing from later versions of section 8510 (now 5301.01 of the Ohio Revised Code), is the requirement that the notary certify the acknowledgment on the same sheet as the instrument. See OHIO REV. CODE § 1.01 (“All statutes of a permanent and general nature of the state as revised and consolidated into general provisions, titles, chapters, and sections shall be known and designated as the `Revised Code’”); OHIO GENERAL CODE § 8510, OHIO REV.CODE § 5301.01. In fact, the current version of section 5301.07 specifically provides that no instrument conveying real estate is defective or invalid because “the certificate of acknowledgment is not on the same sheet of paper as the instrument.”

It appears that section 5301.45 was enacted to afford an opportunity for parties to physically affix separate pages of an instrument and an acknowledgment clause to enable substantial compliance with section 5301.01. The Ohio Jurisprudence 3d contains an analysis of the interplay between these statutes.

[Section 5301.45] assumes that the certificate of acknowledgment must be printed or written on the same sheet with the mortgage, or else the mortgage is defective; but there is now no statute specifically requiring the acknowledgment to be on the same sheet. The reason for the above provision, so far as acknowledgments are concerned, undoubtedly lies in the fact that under an earlier from of RC section 5301.01, it was required that the acknowledgment be on the same sheet of paper as that on which the conveyance was written. It seems likely that the omission from the statute in this respect was due to judicial construction of the former statute, in regard to which the courts, recognizing the ever-increasing length of instruments such as mortgages, held that the instrument was valid where the sheets were securely fastened together and a certificate of acknowledgment was on the last page. In some cases, emphasis was placed upon the sheets being so fastened together that the one bearing the certificate of acknowledgment could not be removed without showing evidence of mutilation.

69 O. Jur. 3d Mortgages § 102 (1986).

The Ohio Transaction Guide, a multi-volume set that has provided

practitioners with research tools and practice tips for over thirty years is instructive and consistent with this Court’s understanding of the intention of the statute. Section 188.30 of the Ohio Transaction Guide provides that “if a deed is not printed or written on the same sheet with the instrument, the conveyance may be corrected by the judgment of a court or by the voluntary act of the parties.” It continues by providing that “[a]lthough it is not necessary to the validity of the deed that the acknowledgment appear on the same sheet of paper as the deed, the usual practice is to convey the property with the necessary acknowledgments on the same sheet.” Thus, the original and later versions of section 5301.45 were designed as a mechanism for correcting failure to adhere to a repealed requirement of section 5301.01. This Court holds that section 5301.45 was enacted to amend mortgages and deeds where the execution and acknowledgment clauses were on separate pieces of paper, at a time in history when such documents were required to appear on the same page, and the parties wished to physically bind them together. Therefore, section 5301.45 cannot be used to correct the type of acknowledgment clause defect at issue in this case.

2. The debtor’s postpetition acknowledgment was not voluntary

Even if this Court were to find that section 5301.45 can be utilized to cure a defective mortgage certification clause under section 546(b)(1), the debtor’s postpetition acknowledgment was not voluntary. Specifically, the debtor testified at a deposition after being served with process and was required to answer questions under oath. This is not the type of voluntary behavior provided for by the statute, especially because both the deposition and “re-recording” of the mortgage took place after the trustee had initiated this adversary proceeding, and served the debtor with a summons and complaint.

In summary, this Court holds that section 5301.45 can only retroactively perfect a mortgage where the instrument and acknowledgment clause are on separate pages, the parties voluntarily act to attach those pages, and the mortgage is otherwise a validly executed document. Therefore, the Court rejects RBC Mortgage’s attempt to use section 5301.45 and the debtor’s postpetition deposition testimony to correct the type of acknowledgment clause defect at issue in this case.

The Trustee May Avoid the Debtor’s Undivided Half Interest in the Subject Property

Although it is well established that a trustee may avoid a debtor’s half interest when a mortgage is found to be valid as to one co-owner and defective as to the other co-owner, RBC Mortgage asserts that the title of the tenancy held by the debtor and Radbourne somehow mandates a different result. This Court finds that Radbourne and the debtor held the property as joint tenants, as evidenced by the deed’s use of the language to “Mary Brigid, unmarried and Susan Radbourne, unmarried, remainder to the survivor of them,” (emphasis added). Section 5302.20 provides that a deed showing a clear intent to create a joint tenancy with rights of survivorship “shall be liberally construed to do so.” OHIO REV. CODE § 5302.20. This Court finds that based on the clear reading of the deed in question, the intention of the parties was to create a joint tenancy with rights of survivorship.

Further, joint tenants hold “an equal share of the title during their joint lives unless otherwise provided in the instrument creating the survivorship tenancy.” OHIO REV. CODE § 5302.20. Although this statute provides that joint tenants are subject to a proportionate share of the costs related to ownership, it also provides that when a creditor of a survivorship tenant enforces a lien against the debtor’s interest, the interest “shall be equal unless otherwise provided in the instrument creating the survivorship tenancy.” OHIO REV. CODE § 5302.20. This proposition is supported by recent case law. In Simon v. CitiMortgage, Inc., (In re Doubov), 423 B.R. 505 (N.D. Ohio 2010), the bankruptcy trustee sought to avoid the debtor wife’s half interest in property that both spouses mortgaged as joint tenants. The trustee argued that a defective acknowledgment rendered the mortgage avoidable as to the debtor wife. Judge Morgernstern-Clarren held:

When the debtors granted the mortgage, they held the property under a survivorship tenancy. See Ohio Rev. Code §§ 5302.17, 5302.20. Under this form of ownership each survivorship tenant holds an equal share of the title to the property during their joint lives (unless the instrument creating the tenancy provides otherwise, which this one does not.) Ohio Rev. Code 5302.20(B). . . .

. . . .

Under Ohio law, a person is precluded from granting a mortgage on property in which he has no interest. See Ins. Co. Of N. Am. v. First Nat’l Bank of Cincinnati, 444 N.E. 2d 456, 459 (Ohio Ct. App. 1981). Additionally “a mortgagor can only bind the estate or property he has, and a `mortgagee can take no greater title than that held by the mortgagor.’” Stein v. Creter (In re Creter), Adv. No 06-2042, 2007 WL 2615214, at *4 (Bankr. N.D. Ohio Sept. 5, 2007) (quoting 69 Ohio Jur. 3d Mortgages and Deeds of Trusts § 17); see also Stubbins v. HSBC Mortgage Servs., Inc. (In re Slack), 394 B.R. 164, 170 (Bankr. S.D. Ohio 2008). When Mr. Doubov gave the mortgage to Citifinancial, he only held title to the property under a survivorship tenancy; that one-half interest is what he mortgaged.

Similarly, when the debtor and Radbourne mortgaged the property, they did so as joint tenants with rights of survivorship. The instrument creating the tenancy did not provide for other treatment of ownership, and thus the debtor, as a matter of law, held an undivided half interest in the property at the time it was mortgaged. When Radbourne gave the mortgage to RBC Mortgage, she only held a half interest, and that is what RBC Mortgage received. This conclusion is supported by the fact that both the debtor and Radbourne answered the trustee’s complaint by claiming an undivided half interest in the property, and this Court declines to consider any argument by RBC Mortgage that the debtor owes Radbourne some equitable relief as a result of her filing for a petition for bankruptcy. This Court holds that the certificate of acknowledgment is defective and the trustee can avoid themortgage as it relates to the undivided half interest of Mary Brigid.

Unresolved Matters Including Radbourne’s Cross-Claim

While it appears that this decision resolves most of the claims at issue in this adversary proceeding, one matter not yet addressed in this decision is Radbourne’s cross-claim against RBC Mortgage. In her cross-claim, Radbourne alleges that she was damaged as a result of negligence by RBC Mortgage in the preparation of the loan documentation and closing of the loan transaction that are the subject of this adversary proceeding. In its cross-motion for summary judgment, RBC Mortgage also seeks summary judgment on Radbourne’s cross-claim. Radbourne has not filed a response.

The Court is reluctant to decide the merits of Radbourne’s cross-claim absent further argument from the parties on the question of jurisdiction to hear this claim. For example, even if the parties were to consent to the undersigned judge entering a final judgment on the cross-claim, the Court has serious doubts as to whether it has “related to” subject matter jurisdiction over a non-debtor’s tort claim against another non-debtor. See 28 U.S.C. § 1334; In re Dow Corning Corp., 8,6 F.3d 482 (6th Cir. 1996).

An action is “related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankruptcy estate.” 86 F.3d at 489 (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). For example, any recovery to the non-debtor Radbourne is unlikely to affect the debtor’s estate, either positively or negatively. Accordingly, any party wishing to have this Court decide the cross-claim should be prepared to address the issue of subject matter jurisdiction at a status conference at 1:30 P.M. on June 8, 2010.

In addition, while not included as a separate count, the trustee does seek, in her prayer for relief, authority to sell the real property, including the interest of the non-debtor co-owner. Therefore, counsel shall be prepared to advise the Court at the status conference as to what additional steps are needed to resolve all remaining claims in this adversary proceeding. Until there is a final decision on Radbourne’s cross-claim and any other unresolved claims, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed. R. Civ. P. 54(b).

CONCLUSION

For the reasons stated above, the Court holds that the certificate of acknowledgment is defective and the trustee can avoid the mortgage as it relates to the half interest of the debtor. Accordingly, the trustee’s motion for summary judgment is granted. While it appears that this decision is largely dispositive, until there is a final decision on Radbourne’s cross-claim, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed R. Civ. P. 54(b). The Court will conduct a status conference at 1:30 p.m. on June 8, 2010. Counsel shall be prepared to advise the Court as to what additional steps are needed to resolve all remaining claims in this adversary proceeding.

Page 24

JUDGMENT

For the reasons stated in the separate Memorandum of Opinion, the Court holds that the certificate of acknowledgment is defective and the trustee can avoid themortgage as it relates to the half interest of the debtor. Accordingly, the trustee’s motion for summary judgment is granted. While it appears that this decision is largely dispositive, until there is a final decision on Radbourne’s cross-claim, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed R. Civ. P. 54(b). The Court will conduct a status conference at 1:30 p.m. on June 8, 2010. Counsel shall be prepared to advise the Court as to what additional steps are needed to resolve all remaining claims in this adversary proceeding.

IT IS SO ORDERED.

—————

Notes:

1. This Memorandum of Opinion is not intended for official publication.

2. In Zaptocky, the Sixth Circuit identified “three major prerequisites for the proper execution of a mortgage: (1) the mortgagor must sign the mortgage deed; (2) the mortgagor’s signature must be attested by two witnesses; and (3) the mortgagor’s signature must be acknowledged or certified by a notary public.” Zaptocky, 250 F.3d at 1024. The differences between Zaptocky’s three requirements and Leahy’s four requirements are (A) the deletion in Leahy of Zaptocky’s second requirement — attestation by two witnesses — due to a change in the statute, and (B) the Leahy court’s breaking down of Zaptocky’s third requirement — certification of acknowledgment — into three separate parts.

Foreclosure Backlog Helps Troubled Borrowers

21 April 2010 @ 03:03 pm EDT

An estimated 1.4 million borrowers have failed to pay their mortgages in more than a year, but continue to live in the properties, according to Lender Processing Services, which tracks mortgages on 40 million homes.

Under the new government regulations, it takes banks 14 months to evict nonpaying borrowers – longer in some states. “Many of these people are gaming the system,” said Ted Jadlos, a managing director at Lender Processing.

Also, banks aren’t in a hurry because once they take possession of a property they must write down its value to reflect market price. Plus, unoccupied homes are more likely to fall into disrepair or be vandalized.

Some analysts predict that this shadow inventory will cause prices to slide further, but so far it’s not happening.

Lender Processing Inc. is the TIP of The Pyramid; please click the link to see their admission to this whole scheme of fraud in question. As it turns out Big Brother has been watching! Anyone want shares NOW?? Goldman had met with LPS on 2/23 in a GS’s Tecnology and Internet Confrence Presentation. In turn of events following the Wall Street Journal story and amongst many other media articles displaying LPS’s on-going investigations, Brian Chip’s article on SmarTrend identified a Downtrend for Lender Processing Services (NYSE: LPS) on March 31, 2010 at $38.26 stating “In approximately 2 weeks, Lender Processing Services has returned 3.3% as of today’s recent price of $36.99. Lender Processing Services is currently below its 50-day moving average of $38.94 and below its 200-day moving average of $37.98. Look for these moving averages to decline to confirm the company’s downward momentum”. Then two days later LPS (NYSE: LPS) climbed 1.16% to $37.42 after Goldman Sachs upgraded the company’s share from Neutral to Buy with an one year price target of $48. How lucky right? So I guess GS has every right to upgrade LPS since their last meeting with them on possible involvement. But the world is now well aware of GS’s shenanigans thanks to LOUISE STORY and GRETCHEN MORGENSON’s article in the New York Times U.S. Accuses Goldman Sachs of Fraud: THE NEW YORK TIMES, According to the complaint, Goldman created Abacus 2007-AC1 in February 2007, at the request of John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007 by correctly wagering that the housing bubble would burst. Should we put any vailidity into their ratings or upgrades? NOT!

The good thing that came along the 10′s of thousands of visits within the last month, this blog has been used in several court houses.

The Law Offices of David J. Stern has only about 15 attorneys, according to legal directories.

However, it’s the biggest filer of mortgage foreclosure suits in Florida, reports the Tampa Tribune. Aided by a back office that dwarfs the law firm, with a staff of nearly 1,000, the Miami area firm files some 5,800 foreclosure actions monthly.

The back-office operation, DJSP Enterprises, is publicly traded and hence must file financial reports with the Securities and Exchange Commission. It netted almost $45 million in 2009 on a little over $260 million in gross revenue that year. The mortgage meltdown of recent years apparently has been good to the company: In 2006, it earned a profit of $8.6 million on $40.4 million in revenue.

Stern, who is the company’s chairman and chief executive officer, could not be reached for comment, the newspaper says.

His law firm has been in the news lately, after one Florida judge dismissed a foreclosure case due to what he described as a “fraudulently backdated” mortgage document, and another said, in a hearing earlier this month concerning another of the Stern firm’s foreclosure cases, “I don’t have any confidence that any of the documents the court’s receiving on these mass foreclosures are valid.”

LYNN E. SZYMONIAK, ESQ.

The Metropolitan, PH2-05 403

South Sapodilla Avenue

West Palm Beach, Florida 33401

April 19, 2010

Dear Honorable Judges in Foreclosure and Bankruptcy Proceedings:

This letter concerns how a Jacksonville, Florida publicly-traded company, Lender Processing Services, Inc. solves Deutsche Bank National Trust Company missing documents in foreclosure cases. Deutsche Bank National Trust Company (“DBNTC”) is the plaintiff in the majority of foreclosure actions filed in thousands of counties in America since 2007. Deutsche Bank is sometimes referred to as “America Foreclosure King.” There is currently a Department of Justice investigation of LPS and its influence over law firms in foreclosure actions, according to an article in the Dow Jones Daily Bankruptcy Review on April 16, 2010.

In these foreclosure actions, DBNTC is usually acting as the trustee for a mortgagebacked securitized trust. This means that a securities company made a commodity out of approximately 5,000 mortgages that were bundled together. The notes in the trust have a face value of approximately $1.5 billion in each trust. Investors buy shares of these trusts. Deutsche Bank is the most common name in the business of being a Trustee for Mortgage-Backed trusts. Other banks very active in this role of Trustee include Wells Fargo, U.S. Bank, Citibank, Bank of New York, JP Morgan Chase and HSBC.

When each of these trusts was made, the securities company responsible for the securitization (often Financial Assets Securities Corporation in Greenwich, Connecticut) was supposed to have obtained mortgage assignments showing that the trust had acquired each mortgage and note from the previous owner, which was most often the original lender. The trust documents specify that the mortgages, notes and assignments in recordable from will have been obtained by the trust. Most mortgage-backed trusts included the following or equivalent language regarding Assignments:

Assignments of the Mortgage Loans to the Trustee (or its nominee) will not be recorded in any jurisdiction, but will be delivered to the Trustee in recordable form, so that they can be recorded in the event recordation is necessary in connection with the servicing of a Mortgage Loan.

Trustees take very few actions relating to the individual properties in the trust. Typically, the bank acting as a trustee for a mortgage-backed trust hires a mortgage servicing company to deal with issues involving the individual mortgages in the trust. The mortgage servicing companies in turn hire a “default management company” to foreclose when a homeowner defaults on payments on a loan that is part of the trust. Lender Processing Services in Jacksonville, Florida, is the largest mortgage default management company. Deutsche Bank National Trust Company uses several mortgage servicing companies, but most often uses American Home Mortgage Servicing, Inc. in Irving, Texas as its mortgage servicing company.

In tens of thousands of foreclosure cases filed by Deutsche Bank National Trust Company as trustee for a mortgage-backed trust, Deutsche Bank has not produced the mortgage, note or Assignment and instead has filed pleadings claiming that the original mortgage and note were inexplicably lost. In these cases, Deutsche Bank uses specially prepared Mortgage Assignments to show that they have the right to foreclose. These documents were often prepared by clerical employees of Docx, LLC, a subsidiary company of Lender Processing Services, the default management company. Hundreds of thousands of other Mortgage Assignments came from the LPS office in Dakota County, Minnesota. More recently, these documents were produced from the LPS offices in Jacksonville, Duval County, Florida. In thousands of other cases, LPS directs the law firms it hires to use the employees of the law firms to sign as officers of Mortgage Electronic Registration Systems to create the documents necessary for foreclosure

a) Mortgage Electronic Registration Services (MERS) is identified as the grantor and American Home Mortgage Servicing, Inc. is identified as the grantee; within days (or minutes), a second Assignment is filed, identifying American Home Mortgage Servicing, Inc. as the grantor and Deutsche Bank National Trust Company as trustee for the trust as the grantee;

b) a mortgage company no longer in existence is identified as the grantor and American Home Mortgage Servicing, Inc. is identified as the grantee; within days (or minutes), a second Assignment is filed, identifying American Home Mortgage Servicing, Inc. as the grantor and Deutsche Bank National Trust Company as trustee for the trust as the grantee;

c) a mortgage company no longer in existence is identified as the grantor and Deutsche Bank National Trust Company as trustee is identified as the grantee;

d) American Home Mortgage Servicing, Inc., purporting to be the “successor-in-interest” to Option One Mortgage Company, is identified as the grantor and Deutsche Bank National Trust Company as trustee is identified as the grantee;

e) Sand Canyon Corporation, formerly known as Option One Mortgage Company, is identified as the grantor and Deutsche Bank National Trust Company as trustee is identified as the grantee, with no further explanation of how both American Home Mortgage Servicing and Sand Canyon have authority to act for Option One Mortgage.

On several hundred thousand Assignments, the individuals signing as officers of the grantor were actually clerical employees of Lender Processing Services, the mortgage default management company hired by American Home Mortgage Servicing, Inc., working for the grantee – Deutsche Bank National Trust Company. On several hundred thousand Assignments, the very same individuals signed as officers of both the grantor and grantee.

In all of these hundreds of thousands of cases, no Assignment actually took place on the date stated and no consideration was paid by the grantee to the grantor despite the representations in the Assignments. Most significantly, no disclosure was ever made to the Court in the foreclosure or bankruptcy case or to the homeowners in default that the original Assignments to the Trust were never made – or were lost – or were defective and that the recently-filed Assignments were specially made to facilitate foreclosures years after the property was transferred to the trust.

An examination of the signatures on these Assignments shows that many are forgeries, with several different people signing the names Linda Green, Tywanna Thomas, Korell Harp, Jennifer Ohde, Linda Thoresen and many of the other names used on several million mortgage assignments, as I have reported in my article “Compare These Signatures.” Many of these same individuals use at least a dozen different job titles as I have reported in my article, “An Officer of Too Many Banks.” These articles are available at www.frauddigest.com.

Copies of Assignments from MERS to American Home Mortgage Servicing, Inc. are attached hereto as Exhibit 1.

Copies of Assignments from American Home Mortgage Servicing Inc. to Deutsche Bank as Trustee are attached as Exhibit 2.

Copies of Assignments from American Brokers Conduit, a mortgage company no longer in existence at the time the Assignments were made, to Deutsche Bank as trustee are attached as Exhibit 3.

Copies of other Assignments to Deutsche Bank as Trustee signed by employees of Lender Processing Services, working for the grantee Deutsche Bank, but signing on behalf of the grantor mortgage companies or banks, or MERS as nominee for the grantor mortgage companies or banks, are attached as Exhibit 4.

Copies of Assignments from American Home Mortgage Servicing, Inc. as the successorin-interest to Option One Mortgage as grantor and Deutsche Bank as Trustee as the grantee are attached as Exhibit 5.

Copies of Assignments from Sand Canyon, formerly known as Option One Mortgage as grantor and Deutsche Bank as Trustee as the grantee are attached as Exhibit 6.

Copies of Assignments signed by employees of law firms working for Lender Processing Services on behalf of American Home Mortgage Servicing, Inc. and ultimately for grantee Deutsche Bank, where such employees signed as officers of MERS as grantor are attached as Exhibit 7.

Copies of Assignments signed by employees of Lender Processing Services on behalf of grantors and notarized in Duval County, Florida for grantee Deutsche Bank, filed by law firms working for Deutsche Bank are attached as Exhibit 8.